Robots Appear To Raise Productivity Without Causing Total Work Hours To Decline

Hallie Siegel writes: We often read about the economic impact of robots on employment, usually accompanied with the assertion that "robots steal jobs". But to date there has precious little economic analysis of the actual effects that robots are already having on employment and productivity. Georg Graetz (Professor of Economics at Uppsala University) and Guy Michaels (Professor of Economics at the London School of Economics) undertook a study (abstract) of how robots impacted productivity and employment between 1993 and 2007, and found that "industrial robots increase labor productivity, total factor productivity and wages." And while there is some evidence that they reduced the employment of low skilled workers, and, to a lesser extent, middle skilled workers, industrial robots had no significant effect on total hours worked.

This is important because it seems to contradict many of the pessimistic assertions that are presently being made about the impact of robots on jobs. What I am especially curious about is post-2007 data, however, because it's just in the past few years that we have seen a major shift in industrial robotics to incorporate collaborative robots, or co-robots. (Robots specifically designed to work alongside humans, as tools for augmenting human performance.) One might reasonably suspect that some of the negative impact of industrial robotics on low and middle skilled workers pre 2007 could be offset by the more recent and increasing use of co-bots, which are not designed to replace humans, but instead to make them more efficient.

Comments

I've said it before

[gurps_npc]

and I'll say it again - technology INCREASES jobs, never decreases it - over the long term. Over the short term it can make certain skills worthless, putting some people out of work, but that's it.

Mainly because work is not a set amount. We don't need X, and never need X+1. The amount of work that we want to be done so far exceeds the amount of work we need to do, or can do, that if we replace every single job in the entire world, in twenty years, all the new people will have created new jobs.

Give clothing to every single person in the world? We want more than one outfit. Give us 100 outfits each? We want to each have a unique, handsewn outfit. etc. etc. etc. Give us all sex bots and we will each want two sex bots for a threesome.

That's the nature of mankind.

No jobs? No talk to me when mankind has terraformed every planet in the solar system. Till then, stop being a ludite.

Re:I've said it before

[CastrTroy]

While I generally agree, what happens when the only jobs left are those that require creativity or critical thinking. There's a lot of people out there who can't do anything more complicated than repeating a few simple tasks over and over again. These jobs are going to be replace by robots. When the only jobs left are jobs that require high levels of thought, there's going to be a lot of people who simply can't hold down a job. I don't think that changing the way we educate people or making education free or anything else is going to be able to change the fact that some people don't have the cognitive ability to do the high level jobs that robots won't be able to do.

Re:I've said it before

[PopeRatzo]

and I'll say it again - technology INCREASES jobs, never decreases it - over the long term.

If robots don't cause total human working hours to decline, then what the fuck good are they? Are we really automating the work force so people can work more? If so, then please stop with the robots.

Or, maybe we can just dispense with the "robots will make human lives easier" BS and just go straight to "robots will increase profits for people who already have all the fucking money".

Rule of thumb: If there's a human endeavor that doesn't make human lives better, then it is not worth doing.

Re:I've said it before

[PopeRatzo]

Not a great example, but I'm sure others can think of a better one.

Let's hope so. Because there's no question that automation has lowered the incomes of working people. Robots devalue labor, so if the goal is to make people poorer, it's working.

Re:I've said it before

[Javagator]

Redistributes wealth so that the new unemployed can live and find creative and entertaining ways to spend their lives.

I like this solution. I would quickly become one of the new unemployed.

Re:I've said it before

[gtall]

You mean in the past technology has increased jobs. There is no universal law that it be so in the future.

My sister tried to use this argument about why a particular tree limb didn't need to be cut down. It had never fallen in the past so it would never fall in the future.

No decrease does not mean an increase

[duckintheface]

The study concluded that productivity increased while hours worked stayed the same. As the human population grows and automation increases, it's not enough that jobs are not lost. New jobs must be created.

In the absence of robots, the higher level of production would have meant new jobs, but that is not longer the case. In effect, a job not created is a job lost.

Re:No decrease does not mean an increase

[alvinrod]

In the 1950's the United States was one of the few countries that wasn't completely devastated from the recent War. If so much of Europe wouldn't have been so ravaged by the war and focusing on rebuilding, the prosperity Americans experienced at that time wouldn't have existed. There were also a lot fewer (approximately about half the current population) people, which also means lower demand for housing in prime real-estate areas. Medically speaking, there was no treatment for many of the diseases or conditions that are either manageable or completely curable today. Medicine is so much better now that the average life expectancy is up over five years even though our country has a massive obesity problem. In the past, you'd just get your diagnosis and die for a lot of things, whereas now we can keep you alive, albeit expensively.

The 50's are gone and the world has changed so much that it's probably impossible to get back to that point without massive amounts of wealth redistribution or a significant investment in changing education to be capable of producing the kind of work force that can lead that lifestyle.

Re:No decrease does not mean an increase

[Harlequin80]

American houses are larger - 1725sqft in 1983 to 2598 in 2014
Life expectancy is longer - 69.7 in 1960 to 78.78 in 2012 (US)
Disposable income per month - 1959 $351 US Billion to 13429.30 US Billion 2014
Housing ownership rate - 1959 62.9% 2014 63.7%

So basically in all of those measures the US is better off today than it was in 1960. Even your comment about people living with their parents is not true as home ownership rates have remained pretty constant. You live longer, you have more disposable income and you live in bigger houses.

Re:No decrease does not mean an increase

[gtall]

"If so much of Europe wouldn't have been so ravaged by the war and focusing on rebuilding, the prosperity Americans experienced at that time wouldn't have existed."

Nope, the American economy at that time was very insular. In fact, the U.S. went into a recession after the war because it had too much excess capacity now producing things that neither the American or any economy needed. It took until 1950 before gdp hit the same level as 1945 (figures adjusted for inflation).

Exports didn't start making up a big part of the U.S. economy until the free trade agreements after 1970. One of the things that caused the inflation during the 70's was the 60's. Johnson thought he could have guns and butter. It turns out you can, for awhile, until the extra cash in the economy caused it to overheat. Reagan, but mostly Paul Volker as head of the Fed, wrung it out of the economy....errr...but not the deficit spending, that increased under Reagan. The dot com bubble during the 90s soaked a lot of that up, and caused the budget to balance. Clinton had little to do it with. The bubble burst about 8 months before his presidency ended and thus ended Al Gore's chances to be president. The U.S. then went into a recession from the burst dot com and then 9/11 happened which depressed economic activity further.

Re:No decrease does not mean an increase

[AmiMoJo]

In the 1950s black people were second class citizens. Homophobia was pretty rampant (it was actually illegal in many countries, not sure about the US). Access to information was much more limited before the internet. While in legal terms you may have lost some freedom recently, overall things are much better now than they were in the 1950s.

Re:And where the hell's my leisure time?

[CastrTroy]

The owner of the robots got a very nice pay raise. The robots are the ones who actually increased the productivity, so it's only natural that the owner of the robots would get to reap the rewards. Why should the human workers get a pay raise, they aren't the ones who are actually increasing productivity.

Re:Robots do eliminate jobs

[Overzeetop]

"crappy, boring, mind-numbingly repetitive tasks"

You might be surprised that this is the extent of the ability for a great number of workers out there. It's easy to forget when you're in an all-white collar environment that there is a large portion of the population which has close to zero independent problem solving ability, and an overlapping portion which has almost zero reliability. As someone who deals with these people on a regular basis, I can tell you that they are some of the nicest people I know, and yet sometime during their lifetime there will be a robot which can do their job better and more reliably at a fraction of what it costs to feed, clothe and house them.

The pessimists totally ignore history.

[GPS Pilot]

Every new tool or technology has ultimately enlarged the economy, and increased the number of jobs -- after causing temporary disruptions, like putting buggywhip makers out of work. For every buggywhip maker who lost his job, thousands of jobs have been created in the auto industry and other supporting industries (paving roads, transporting fuels, R&D of improved airbags, etc.).

There are more people employed today that at any earlier time in history, and most of the people who are employed today can thank some recent technology without which their job wouldn't exist.

The more disruptive the technology, the more jobs it ultimately creates. It's pure ludditism to think that robots would be the first exception to this rule.

Here's the problem...

[erp_consultant]

Robots do increase productivity. Often it opens up jobs in higher skilled areas, like QA people that check the jobs that the robots do to ensure quality. We see this a lot in the Auto industry.

The problem is what happens to the lower skilled people that get displaced by the robots? They may not have the skills, or the aptitude to learn those new skills, to do the new jobs that the robots make available. Now you have a bunch of people that used to be productive that are now unemployable.

What do we do with them? Sure, some of them might be old enough to retire. What about the person that went to work for GM right out of high school? Now they are 40 or 45 with no real skills other than what they learned on the assembly line. They probably earned a pretty good living on the assembly line. Now they are unemployed with no college degree.

Whose responsibility does it now become to support these people? The company? Not bloody likely. They put the robots in to save money. Robots don't get sick or go on maternity leave or get pensions or 401K matching. The government? Society at large? Who knows.

Re:Here's the problem...

[EmperorOfCanada]

I met a guy (he was around 17) who was working for a pulp mill. His job was working on a machine that debarked the trees. They would run through the machine and then appear in front of him. He had two cords ending in a button which he held in his hands. One button would send the insufficiently debarked tree around for another cycle of debarking, and the other button indicated that it was good enough and could continue.

He indicated that this job was mind numbing to the extreme but that it paid very very well for someone not yet finished highschool. If he worked there long enough his hourly pay would be actually pretty good for the rural area he was in. He told me that many people who worked at the mill never bothered to finish high school and few went to University because even with a degree it would be hard to beat a job at the mill.

I am pretty sure that I could build a bark detecting optical system in under a week to replace him if the mill were still open. But it isn't through a combination of far lower demand for paper product because of the electronic age, combined with far higher efficiencies at the existing mills.

But all one has to do is go to the early seasons of the show "How it's made" and see that even fairly automated assembly lines usually had people doing things such as quality control, packaging, and the occasional odd procedure in the middle. Now, if you watch the recent seasons, about the only thing people do is to load crap into the machines at the beginning, and forklift large boxes of the final product in the end.

One of the final job killers are the pick and place machines.

Two factories

[aralin]

Two factories make toilet paper, one introduces robots and doubles its production and also profit margins, the number of employees stays the same. There is no impact to those employees, but the other factory goes out of business. That is where the jobs get lost and that is what the study does not measure. Same amount of toilet paper is produced at twice efficiency and half of the jobs get lost in the overall economy.

Re:Two factories

[SillyHamster]

There is no impact to those employees, but the other factory goes out of business. That is where the jobs get lost and that is what the study does not measure.

Read the article.

Although we do not find evidence of a negative impact of robots on aggregate employment, we see a more nuanced picture when we break jobs and the wage cost down by skill groups. Robots appear to reduce the hours and the wage costs of low-skilled workers, and to a lesser extent middle skilled workers. They have no significant effect on the employment of high-skilled workers. This pattern differs from the effect that recent work has found for ICT, which seems to benefit high-skilled workers at the expense of middle-skilled workers (Autor 2014, Michaels et al. 2014).

Ask former bulk food packagers

[EmperorOfCanada]

If you were to poll people who once worked in bulk goods packaging you might find that they are working even more hours at their minimum wage jobs because they lost their jobs on the assembly line that barely kept their families fed. Since 2002 something like 85% of jobs in the bulk packaging world have gone. This, with a huge increase in bulk packaging output.

Missing ingredient: consumers

[Tablizer]

It essentially allows the same worker to do more per hour. However, unless somebody actually purchases the output, the factory is limited to the amount of extra widgets it can actually sell.

The bottleneck in the cyber-age economy is consumers, so far. The same or fewer workers can produce more, meaning the proportion of jobs that increase to absorb the extra products are not there to match the output increase.

Nobody has figured out how to get more and bigger spending-consumers. Most of the revenue and profits are log-jammed at the 1%, who don't need 500 iPhones each.

Taxing the rich seems the only known way to free the revenue and profits to flow back into the middle- and lower-class consumer. If you have a another way to balance that part of the system of economic flow, I'm all ears.

Re:Nope

[AmiMoJo]

Redistribution of wealth is inevitable. The only question is if you want it done in a controlled, orderly fashion (socialism) or by violence.

Re:Nope

[AmiMoJo]

Looks like you didn't study history very well. Eventually those who amass wealth are always overthrown and the wealth redistributed. It's inevitable, because wealth accumulates and eventually the majority decide that they are better of risking a violent overthrow than continuing to live off the crumbs that are handed down to them.